Beijing on Wednesday urged Tokyo to resume negotiations with China over the Diaoyu Islands in response to a report indicating Tokyo may "acknowledge" China's claim to them to ease tension.

"Japan should face reality, acknowledge the dispute, correct its mistakes and come back to a solution to the issue through negotiations," Foreign Ministry spokesman Hong Lei told a regular news conference.

Japan is seeking to improve relations with China by only acknowledging Chinese claims to the Diaoyu Islands, while maintaining its position that no official territorial dispute exists over them, Japan's Kyodo News reported on Wednesday.

Analysts said Tokyo's so-called acknowledgement shows little sincerity toward repairing the bilateral ties that have been soured by its "nationalisation" of the islands, and it is only the latest move to rationalise its illegal "purchase".

The plans would allow Japan to make a minor compromise with China while maintaining its long-held position, Kyodo's report said, adding if Japan makes clear that it "fully understands and respects" China's claims, it might be construed by China as acknowledging the existence of a territorial dispute between the two countries.

It remains uncertain, however, whether China would be encouraged by the Japanese step to improve the impaired ties, it said.

Hong stressed that China's stance on the islands has been consistent and clear. But Japan has refused to reverse course on its so-called nationalization of the islands, which have belonged to China for centuries, despite Beijing's strong calls to rescind the purchase.

Liu Youfa, vice-president of the China Institute of International Studies, said Tokyo's "compromise" is based on the wrong pretext that the Diaoyu Islands belong to Japan and is another trick to push Beijing to accept its illegal claim.

The trick may also aim to woo the Japanese by stabilising Tokyo's rocky foreign relations before its upcoming presidential election, Liu said.

"China will never accept such plan and is firmly against any step by Japan violating our sovereignty."

Tokyo's infringement on China's territorial sovereignty ignited a diplomatic crisis between the two countries and sparked anti-Japan protests across China last month.

Many academic conferences and cultural exchanges to celebrate the 40th anniversary of the establishment of bilateral diplomatic ties were canceled. The number of airlines flights and tour groups from China to Japan has decreased sharply due to low demand.

Major Japanese automakers, including Toyota, Honda and Nissan, are slowing production in the world's biggest car market.

Toyota said on Tuesday that sales of new vehicles in China dropped 49 per cent in September from a year earlier to 44,100 vehicles.

The high-pitched row between Beijing and Tokyo over the islands is exacting a growing toll on Japan, threatening to send its recovery from last year's disasters into reverse, according to The Associated Press.